When someone dies, their loved ones are often left wondering who inherits everything. This can be difficult to answer, especially if the deceased person did not leave a will. In most cases, the estate will go through probate to distribute the assets. However, there are some exceptions to this rule. If the estate is not significant, the family members may file an affidavit instead of going through probate. And, those individuals who put their entire estates in a trust will keep their matters private. In short, there is no one answer to this question – it depends on individual circumstances. Let’s take a closer look at how to know who inherits an estate.
Who inherits an estate and how to find out about it depends on many factors, such as:
- Whether the deceased person had a will
- How much their estate is worth
- Whether they put assets in a trust
- Whether they held assets in inheritable accounts such as joint savings or retirement accounts
We’ll look at each of these factors to help you understand what happens when someone dies.
The Probate Process
When someone dies, their estate typically goes through a process called probate. Probate is a court-supervised process for distributing the deceased person’s assets to their beneficiaries. The last will and testament usually names the beneficiaries, but the court will determine who inherits the estate if there is no will.
The court distributes the estate according to NC intestate law when there is no will. Intestate law is a long and complex list of who inherits what and in what percentage according to blood relations.
Often the results are not what you would think. If the individual dies married, their spouse may only receive a portion of the assets. The rest may go to children, parents, or other relatives.
Any estate going through probate court also faces public inventory of the estate’s assets and liabilities. The entirety of the estate is public knowledge. Who inherits what and in what amounts is also general knowledge. Estates going through probate are often subject to will contests or other court matters. Relatives may feel aggrieved about others’ inheritances.
Trusts & Gifting
There are a few ways an individual might avoid probate. One is to put all of your assets in a trust. A trust is an arrangement in which one person (the trustee) holds property for another person (the beneficiary). The trustee manages the property for the benefit of the beneficiary. The trustee can be anyone – a family member, friend, or professional.
You can open a living trust or an irrevocable trust. When you open a trust, you essentially transfer ownership of your assets to the trust. The trustee, who is usually a family member or close friend, manages the assets for the beneficiaries.
Those individuals who put their entire estates in a trust keep their matters private. The reason is that the chosen trustee distributes the inheritances to the beneficiaries. The estate does not go through the very public probate court process.
Another way to avoid probate is to give your assets away while still alive. You can gift any amount of money or property to anyone you choose. However, there are some restrictions on gifting. For example, you can only give up to $16,000 per person per year without incurring any gift tax.
Avoiding Probate for Small Estates
In some cases, an estate can avoid probate altogether. For example, if the deceased person’s estate is worth less than $20,000 ($30,000 for a couple), the family members may file an affidavit instead of going through probate.
An affidavit is a legal document that allows the family members to receive the assets without going through probate. The family members must fill out a form and submit it to the court to file an affidavit. The court will then issue an order approving the affidavit.
Accounts Pass According to the Named Beneficiary
Finally, any of the deceased person’s assets held in a joint account with the right of survivorship will pass to the surviving owner without going through probate. Inheriting as the beneficiary of an account also occurs with life insurance policies, retirement accounts, or real estate owned with the right of survivorship in NC.
Even if the will states that someone else inherits the account, you inherit the account if you are the named beneficiary. The named beneficiary on the account trumps the will every time.
We Can Help
At Cape Fear Law, our estate planning attorneys can help you plan for your own death or the death of a loved one. We can help you create a will, living trust, or irrevocable trust. We can also help you gift assets to your loved ones. Contact us today to schedule a consultation.